Aviall Reports Second Quarter Continuing Operations EPS of 14 Cents on Sales Increase of 27 Percent
DALLAS, Aug. 7 /PRNewswire/ -- Aviall, Inc. (NYSE: AVL) today reported
financial results for its second quarter ended June 30, 2000. Net sales for
the period were $120.7 million, up $25.4 million or 27% versus net sales of
$95.3 million in the second quarter 1999. Sales grew 29% in the Parts
Distribution business despite continuing indications of weakness in the
domestic aviation marketplace owing to higher fuel prices and tighter managed
capacities by many airlines. The sales increase trend continues from the
prior quarter and reflects both the addition by Aviall of the new Rolls-Royce
Model 250 product line and the steady recapture of market share lost in 1999
-- primarily attributable to the new ERP computer system installation. At
Inventory Locator Service (ILS), second quarter 2000 sales were down slightly,
but subscriber accesses were at an all-time high.
Second quarter 2000 gross profit was $28.5 million, up $3.9 million from
second quarter 1999. The gross profit percentage of 23.6% reflected the
slightly lower margin anticipated with the full incorporation of the Rolls-
Royce business into Parts Distribution.
Second quarter 2000 net earnings from continuing operations were
$2.5 million or 14 cents per share (diluted) versus comparable net earnings of
$3.1 million or 17 cents per share (diluted) in the prior year. In second
quarter 2000, a discontinued operations gain of $0.1 million was recorded
versus a $1.4 million gain from discontinued operations in second quarter
1999. Alongside an impressive 27% revenue increase, SG&A expenses rose, as
expected, 17% or $3.2 million compared to second quarter 1999. The increase
was due primarily to planned development expenses for new Internet initiatives
at both ILS and Parts Distribution; incremental operational expenses for the
new Rolls-Royce product line; and additional depreciation related to the new
ERP system. As a percentage of sales, SG&A expenses actually dropped
140 basis points year-over-year. Finally, year-over-year interest expense
rose $1.4 million as a result of higher rates and planned increased borrowings
due to Rolls-Royce working capital requirements.
For the first two quarters ended June 30, 2000, the Company reported net
sales of $234.7 million, gross profit of $56.0 million, or 23.9% of sales, and
net income prior to the effects of discontinued operations of $4.7 million, or
26 cents per share. The 28% net YTD increase in sales was mainly due to the
addition of the Rolls-Royce contract and steady recapture of market share lost
in 1999. The lower net income was due to planned developmental SG&A expenses
and higher interest expenses associated with anticipated increased borrowings
for Rolls-Royce working capital requirements and the impact of higher rates.
Review and Outlook
"We continue to be very encouraged by Aviall's progress on several
fronts," said Paul E. Fulchino, Aviall's chairman, president and chief
executive officer. "ILS continues to demonstrate its 'First Mover' advantages
through its continuous introduction of new economy B2B system capabilities.
We have advanced rapidly with our ILS Internet development initiatives and are
on schedule to complete our full transaction on-line parts management
capability -- our next-generation 'Contact to Contract'(TM) e-commerce
platforms -- of which ILS's recently announced new BidQuest product represents
another major milestone.
"We are also pleased to have been recently singled out by Forbes magazine
as one of the most promising B2B sites in the aviation industry. This is
ILS's second e-commerce award selection in six months, the other being
Aviation Maintenance magazine citing ILSmart.com as one of the 'Top 50
Products.' ILS was the originator of the e-market concept in the aviation
sector, and it is our intent to take this industry leadership position to the
next level. This requires continued enhancements to ILS's global electronic
marketplace using both our award-winning ILSmart.com web site and dial-up
networks.
"As the core of our 'Contact to Contract'(TM) initiative, it remains our
intent to offer full transaction management capabilities through our advanced
web-based technologies. The ILS marketplace will incorporate specific
capabilities such as our advanced Purchase On-Line Catalog product, customer
web hosting and our latest on-line Surplus Sales Auction. We also plan to
provide our customers with on-line documentation management, financial
services, shipping, and other fulfillment capabilities. We will also be able
to provide customers with key data mining applications in support of their
requirements at all levels. To ensure success, ILS's technology plan
envisions the application of best-of-class technologies developed in-house and
in cooperation with key technology providers."
Fulchino continued, "As discussed last quarter, we have moved aggressively
forward on our Parts Distribution technology plans to facilitate and enhance
customer service and interface with our ERP system and award-winning
aviall.com web site. In parallel, the Company has implemented a more robust
sales coverage model with a goal of improving corporate-wide sales
productivity and upgrading daily communications with customers. This
objective has been bolstered by our recent selections of best-of-breed
technology providers. Specifically, Aviall Services has fully activated its
technology plan with the selection of BroadVision to enhance the Parts
Distribution website, aviall.com; Siebel Systems to customize and install its
world-class Customer Relationship Management system (CRM); and NEON to
facilitate the integration of the aviall.com website, the CRM module, and
Aviall's ERP system. Lastly, the Company is pleased with its initiatives to
increase Parts Distribution's operational efficiencies which, when combined
with our enhanced system technologies, will improve cycle-time performances
and information services to our customers and suppliers."
Aviall will host a conference call at 1-888-791-1856 on Monday, August 7,
2000, at 11:00 a.m. ET. A replay will be available until 6:00 p.m. ET on
Thursday, August 10, 2000, at 1-888-567-0373.
Forward-Looking Statements
The statements contained in this release that are not historical facts are
forward-looking statements (as such term is defined in the Private Securities
Litigation Act of 1995). Actual results may differ materially from those
expected in the forward-looking statements. These forward-looking statements
involve risks and uncertainties, including pricing pressures, shifts in market
demand, general economic conditions and other factors, including, among
others, those that affect flight activity in commercial, business and general
aviation, the business activities of the Company's customers and suppliers and
developments in information and communications technology.
Note to Editor
Aviall, Inc. is the largest independent distributor of new aviation parts.
The Company distributes and markets products of more than 180 manufacturers
and distributes approximately 90,000 line items from customer service centers
in North America, Europe and Asia-Pacific. Aviall also services aviation
batteries, hoses, wheels and brakes. Inventory Locator Service, Inc., a
subsidiary of Aviall headquartered in Memphis, Tennessee, provides information
and enables commerce via its global electronic marketplace to empower
subscribers to buy and sell commercial aviation and marine parts, equipment
and services.
AVIALL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except share data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2000 1999 2000 1999
Net sales $120,750 95,318 234,713 182,726
Cost of sales 92,269 70,753 178,727 134,075
Gross profit 28,481 24,565 55,986 48,651
Operating and other expenses:
Selling and administrative
expenses 21,679 18,457 43,274 36,667
Interest expense 2,206 796 4,307 1,516
Earnings from continuing
operations before income
taxes 4,596 5,312 8,405 10,468
Provision for income taxes 2,072 2,230 3,698 4,300
Earnings from continuing
operations 2,524 3,082 4,707 6,168
Discontinued operations:
Gain on disposal (net of
income tax expense of $77 in
2000 and $768 in 1999) (A) 143 1,426 143 1,426
Earnings from discontinued
operations 143 1,426 143 1,426
Net earnings $2,667 4,508 4,850 7,594
Basic net earnings per share:
Earnings from continuing
operations $0.14 0.17 0.26 0.34
Earnings from discontinued
operations 0.01 0.08 0.01 0.08
Net earnings $0.15 0.25 0.27 0.42
Weighted average common
shares 18,311,844 18,211,120 18,294,159 18,201,197
Diluted net earnings per share:
Earnings from continuing
operations $0.14 0.17 0.26 0.33
Earnings from discontinued
operations 0.01 0.07 0.01 0.08
Net earnings $0.15 0.24 0.27 0.41
Weighted average common and
potentially dilutive common
shares 18,331,984 18,554,391 18,336,990 18,512,795
(A) The $0.1 million gain from discontinued operations in the second
quarter of 2000 resulted from revised insurance estimates. The
1.4 million gain from discontinued operations in the second quarter
of 1999 resulted from revised sales and use tax reserve estimates
upon finalization of state tax assessments.
AVIALL, INC.
SELECTED BALANCE SHEET ACCOUNTS
(Dollars in thousands)
June 30, December 31,
2000 1999
(Unaudited) (Audited)
Cash $6,240 1,385
Receivables $78,035 62,752
Inventories $116,379 107,562
Accounts payable $42,065 35,063
Debt $89,960 78,011
Shareholders' equity $184,498 179,233
SEGMENT REVENUE
(Dollars in thousands)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2000 1999 2000 1999
Parts Distribution $113,584 87,811 220,220 167,837
Inventory Locator Service (ILS) 7,166 7,507 14,493 14,889
Total Company $120,750 95,318 234,713 182,726
SOURCE Aviall, Inc.
CO: Aviall, Inc.
ST: Texas
IN: AIR
SU: ERN
08/07/2000 08:45 EDT prnewswire.com |
